3.Continued

another 40% must be over three inches; the other 20%—well, it doesn't hurt to have a few stubby ones.

McDonald's is convinced all this trouble pays off. It says a 1975 telephone survey showed that Mac fries were the favorite of 70% of those called.

Even some gourmets like them. "I think McDonald's fries are re­markably good," says television chef Julia Child. "They're cooked in extremely fresh fat." Nutritionists tend to be less enthusiastic. Isobel Contento, a nutrition professor at Columbia University in New York, says, "About half the calories in French fries come from fat, there are very few vitamins, and you'd feel a whole lot fuller eating a comparable amount of green vegetables."

WAYNE STAYSKALCourtesy Chicago Tribune

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THE U.S. ECONOMY 73

9 The Forgotten

_Farmer

THE CRISIS IN AMERICAN AGRICULTURE

fcyDANNY COLLUM

Last year rural Sac County, Iowa, cxperiend three bank failures. In the county seat of Odenbolt (population 1,300), 12 businesses closed, church attendance and collections were down, as were school enrollments which have now declined 7 percent since 1982. Also in 1985 more than 40 Sac County farms were lost to foreclosure, with another 120 in immediate danger.

Across the state in Hills, Iowa, near Iowa City, last December a farmer killed his wife, a man he had bought land from, his banker, and finally him­self. At the time of the tragedy, the farmer was almost a million dollars in debt. The local sheriff said the man left a note "indicating he couldn't stand the problems anymore."

There is a crisis in American agri­culture in the 1980s, a crisis in many ways worse than the one accompany­ing the Great Depression of the 1930s. There are about 600,000 full-time, family-run farms left in the United States, and they are disappearing at the rate of about 30,000 a year. At least a third of the nation's family farmers are carrying levels of debt that place them in imminent danger of bankruptcy. After 40 years of slow shrinkage, the family farm as an insti­tution, a culture, and a vocation is facing extinction.

The current farm crisis is creating a nearly unbearable economic, emo­tional, and spiritual dislocation for

hundreds of thousands of Americans with long-standing ties to the land and no other means of livelihood. And as the experience of Odenbolt, Iowa, indicates, the ripple effects of farm foreclosures are taking down banks, businesses, farm-related industries, and entire communities.

While the farm crisis is creating an ever-widening circle of losers, from 'rural America to the industrial cities, there aresome winners. One big win­ner is the farm-management industry, made up of companies that oper­ate farms for institutional owners. According to theA'ero York Times, the number of farms operated by those companies has risen by more than 40 percent daring the farm crisis. Their acreage now comprises an area roughly the size of Colorado.

Originally the farm management industry mostly served retired people who didn't want to sell their land. But

today its customers include some of America's biggest banks and insurance companies who have "inherited" the land through foreclosure and other institutional investors taking advan­tage of crisis-induced low land prices. Food processing and distribution in the United States has long been an oligopoly controlled by a handful of-corporations. Now the food-growing industry is taking the same route. Further evidence of corporate central­ization of agriculture was recently provided when the Metropolitan Life Insurance Company, already the proud owner of 300 farms, bought out the nation's largest farm-management company, which runs 3,900 farms (including 200 of Metropolitan's) comprising more than a million acres in nine states.

THE CURRENT CRISIS in Amer­ican agriculture is not the result of bad weather, bad luck, or bad man­agement. It is instead the result of bad choices in U.S. agriculture policy, especially in the last 15 years.

In the early 1970s, a fundamental shift occurred in the direction of fed­eral agriculture policy. The U.S. economy was weakened by Vietnam War-induced inflation and new inter­national trade competition from its European and Japanese allies. Then came the 1973 Arab oil embargo and the consequent doubling of oil prices, which further exacerbated both

Great Depression: the economic crisis and worldwide decline in business activity, beginning with the stockmarket crash in October, 1929 and continuing through the 1930s.

New York Times: established 1851, one of the most important national daily newspapers, renowned for its excellent news service.

Vietnam War: see page 15.

74 AMERICA IN CLOSE-UP

4. continued

inflation and the export-import imbalance.

At this time the decision was made to crank up U.S. grain produciton to the highest possible level. The old farm-policy emphasis on price main­tenance was traded in for a policy that emphasized higher production, lower prices, and massive export sales. This had the advantage of redressing the international trade problem while simultaneously holding down dom­estic food prices in a time of inflation.

Government policies encouraged farmers to plant their land from fence row to fence row. Banks were flooded with Middle Eastern petrodollars in search of investment opportunities. Interest rates were low, and the banks actively encouraged farmers to take out loans to buy more land and equip­ment to enlarge their operations and produce still more.

Demand for farm land increased as a result of these changes, and the new levels of land productivity drove the price of farm land sky-high. In turn the increased value of their landhold-ings (a farmer's primary loan col­lateral) allowed farmers to borrow even more, expand more, and produce more. Farmers' total indebtedness grew by leaps and bounds. No one worried about it, though, because America was the bread-basket of the world and there was nothing but clear skies ahead.

But the clouds soon appeared. In 1981 the Reagan administration came into power and induced a crippling recession as the final solution to the domestic inflation problem. The U.S. recession inevitably became a global recession. The market for U.S. grain exports, already reduced by President Carter's grain embargo, now declined further because other countries, par­ticularly those in the Third World, simply could not afford to buy them at any price. Also other countries, especially in Europe and Latin America, had increased their food production to the point that they no longer needed U.S. grain. Some of them, in fact, had begun to compete

with the United States on the world market..

The Reagan administration's pol­icies of high military spending deficits and a tight money supply also com­bined to drive up the interest rates on farm loans, as did bank deregulation. At the same time, the farm recession drove down the value of the land, making it more difficult for farmers to get the loans they needed for seeds and supplies from year to year. Suddenly many farmers found them­selves with an enormous debt load, taken on at the encouragement a few years before, and no way to pay it. Before long the current tidal wave of foreclosures began.

Ultimately, the crisis that is destroy­ing family farms raises serious ques­tions about the social and economic direction America will take in the rest of this century. The economics of the

marketplace are increasingly replacing all notions of the common good in areas ranging from banking and tele-phore service to newspapers and other mass media. The farm crisis is symp­tomatic of that trend. Little room exists in U^S. political debate for the idea that decentralized ownership and control of land and the institution of family farming might have an intrinsic social and moral value that outweighs the demands of the market.

Such a narrow approach to public life will inevitably leave behind stag­gering human damage. Right now the damage is most visible in black and Hispanic inner-city communities without jobs or hope, in the aban­doned industrial towns of the North­east and upper Midwest, and in the farm belt. But it won't stop there. If farm families can be declared dis­pensable, so can we all.

■.

petrodollars: surplus profits accumulated by petroleum-exporting countries. Hispanic: an American citizen or resident of Latin American descent.

farm belt: region in the midwestern U.S. of deep fertile soils which are especially adapted to the production of corn, wheat, oats and soybeans.

THE U.S. ECONOMY 75

^ф Economics vs. Ecology:

Problems with Solutions to Pollution

"... Our short-run look at income and profit keeps us from the long-run look at the future of life."

by Robert W. Haseltine

Industrial pollution — no easy solution

THE EFFECTS OF BOTH AIR and water pollution on the en­vironment have been observed for years. One of the best examples of the debilitating effects of air pollution is Sudbury, Ont., Canada. Interna­tional Nickel and "the world's tallest smokestack" put enough sulfur dioxide and nitric oxide into the atmosphere to have caused the death of all vegetation, with the concomi­tant erosion and loss of all soil down to bedrock, for about 20 miles east of Sudbury. For anyone familiar with the New York City area, the East River and Hudson River both give a good example of water pollution carried to its extreme. A major lack of foresightedness has occurred not only in the business community, but in the consumer community as well.

Prof. Haseltine, Economics Editor ofUSA Today, /s associate professor of economics, State University of New York at Geneseo.

Both sides refuse to accept pollution in its various aspects as having any form of economic consequences. . ..

The average citizen, you and me, is part and parcel of the problem. Unfortunately, as with most complex problems, there are more things in­volved than meet the superficial glance that most of us give to prob­lems of this nature. Most Americans are after the "quick fix." If we are hungry, we go to the nearest fast food place and quickly fill the vacuum. Similarly, in the area of fixing environmental problems which have been developing for well over 100 years, we ask "them" (whoever we may think "them" to be) to quickly make the problem go away, much as a child asks mommy to kiss the bruise and take away the hurt. The solutions are not that easily found.

. .. When it comes down to which is going to suffer, the environment or my family, my family has to take precedence. The pollution spewed

into the atmosphere by the smoke­stack is a long-range problem, while my support of my family must be viewed as a short-range problem. If there is no food coming into the house in the short run, we starve to death — and there is no long run.

The short-run problem

Ever since business began to operate in the beginnings of the Industrial Revolution, it has generally done so with a total disregard for the environ­ment. Business, any business, has to be very cost-conscious if it is going to exist long in a free-market society. At least that is what we are told by American business as it fights any of the laws which would place restric­tions on the manner in which it dumps its wastes into the atmosphere, or the ecosphere in general. Business, according to economic theory, at­tempts to operate all of its produc­tion in a least-cost manner. That is, in putting together the resources

76 AMERICA IN CLOSE-UP

5. continued

which it uses to produce a final good, it uses capital and labor in a manner which will produce the most output for the least possible cost per unit of production.

Business, therefore, will use capi­tal, especially, in such a way that labor, as it works with that capital, will be most productive. For this reason, more and more businesses are turning to robots to do the paint­ing, welding, and countless other te­dious jobs that up to now have been done by wage labor. This means that more and more jobs have disap­peared from the industrial sector of the economy, with no corresponding positions opening up in the service sector. From this stems an over-all loss of jobs, especially among tho; e who have poorer levels of education and a need to protect their families and livelihoods. If business puts into the production line the types of equipment which will clean up the residue so that what comes out of the smokestack is nothing but steam, they recognize that a number of things will have to occur.

In the short run ,iftheydothisand other competing businesses do not do this, their costs of production will rise while that of their competition will not. This means that unit cost is more than it was previously and, if the levels of profits are to remain high enough to satisfy the stock-

holders, then the market price of the good will have to be increased. ...

Polluting the air

The major reason for air pollution, especially as one looks at the prob­lems of hydrocarbons and lead, is the private consumer. In order to save four to 10 cents per gallon, we find people doing away with pollution control devices, or buying a device which allows them to add regular gas to their tank instead of being forced to purchase unleaded. This has caused a problem with the amounts of hydrocarbons and lead in the atmosphere close to the surface, just as the high smokestack has added to the problem of long-distance pollu­tion. The problem which is caused is endemic throughout the world, . . . and the basic cause is that which is outlined above - the economics of self-interest (greed) which causes me, as a consumer, to save as much of my income as possible, just as the busi­ness manager attempts to save the company as much money as possible. I can not point a finger of blame, because, if I do, I find three other fingers pointing back at me. . . .

Polluting the water

The waterways are another . . . area that we find it easier to pollute than to spend the money necessary to

clean wastes properly. Wisconsin has a law that all houseboats must have a self-contained head (toilet) which must be pumped out properly and dumped properly if you have it done in the state of Wisconsin. The cost is not exorbitant, about $5.00. If, how­ever, you go across the river to Iowa, and have it pumped out in that state, it is only about $1.00. What is the difference? In Wisconsin, it is pumped into a storage tank, then into a sewerage disposal system. In Iowa, it is pumped directly into the Mississippi River to become part of the problem of downstream urban areas which may take their drinking water from that river. For the indivi­dual, it becomes a dilemma: Should I save money by pumping in Iowa, and harming the river, or should I waste my money by pumping in Wiscon­sin? For some reason, Iowa does a thriving business in pumping!

Where does it lead? While the first impact is on wildlife, we are all a part of this "marble in space," and what affects other life will eventually affect me. The effect might be emphysema, heart problems, or general ill health, if not death, and it is definitely an economic problem affecting incomes of both business and workers. So far, however, our short-run look at in­come and profit keeps us from the long-run look at the future of life. Yes, we are all a part of the "econo­mics of greed," like it or not.

77

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